Abstract

This note formulates a dynamic two-country (developed and developing
countries) Chamberlin-Heckscher-Ohlin model of trade with endogenous
time preferences a la Uzawa (1968). We examine the relationship between
initial factor endowment differences and trade patterns in the steady
state. In particular, to highlight the integration of developing countries
(e.g., China) into the world trading system, we concentrate on the case of
asymmetric size of two countries (in terms of population). It will be shown
that (i) given that the representative household in each country supplies
an equal amount of labor, only intra-industry trade occurs in the steady
state irrespective of differences in the number of representative households
and that (ii) the number of households being equal, the country with less
labor efficiency becomes the net exporter of the capital-intensive good.

Item Type:

MPRA Paper

Institution:

Kobe University

Original Title:

A Dynamic Chamberlin-Heckscher-Ohlin Model with Endogenous Time Preferences: A Note